Correlation Between Cardinal Health and Origin Materials
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and Origin Materials at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Cardinal Health and Origin Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and Origin Materials, you can compare the effects of market volatilities on Cardinal Health and Origin Materials and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Cardinal Health with a short position of Origin Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and Origin Materials.
Diversification Opportunities for Cardinal Health and Origin Materials
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cardinal and Origin is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Origin Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Materials and Cardinal Health is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Cardinal Health are associated (or correlated) with Origin Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Materials has no effect on the direction of Cardinal Health i.e., Cardinal Health and Origin Materials go up and down completely randomly.
Pair Corralation between Cardinal Health and Origin Materials
Considering the 90-day investment horizon Cardinal Health is expected to generate 0.18 times more return on investment than Origin Materials. However, Cardinal Health is 5.49 times less risky than Origin Materials. It trades about 0.08 of its potential returns per unit of risk. Origin Materials is currently generating about -0.01 per unit of risk. If you would invest 8,458 in Cardinal Health on September 4, 2024 and sell it today you would earn a total of 3,789 from holding Cardinal Health or generate 44.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Cardinal Health vs. Origin Materials
Performance |
| Timeline |
| Cardinal Health |
| Origin Materials |
Cardinal Health and Origin Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and Origin Materials
The main advantage of trading using opposite Cardinal Health and Origin Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, Origin Materials can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Origin Materials will offset losses from the drop in Origin Materials' long position.| Cardinal Health vs. Henry Schein | Cardinal Health vs. Owens Minor | Cardinal Health vs. Patterson Companies | Cardinal Health vs. McKesson |
| Origin Materials vs. Tronox Holdings PLC | Origin Materials vs. Valhi Inc | Origin Materials vs. Lsb Industries | Origin Materials vs. Huntsman |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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